Business groups sound off on regulatory sandbox bill

JEFFERSON CITY, Mo. -- A proposal that would allow innovative businesses to apply for temporary exemptions from certain regulations received support from several business groups Tuesday.

The Regulatory Sandbox Act would create a Regulatory Relief Office with the Missouri Department of Economic Development tasked with identifying state laws and regulations that could be waived for certain businesses for a two-year period. Businesses could apply with the office for a series of exemptions they would like to benefit from, which would be approved or denied by the office.

The office would be advised and could be countered by an advisory committee made up of executive and legislative appointees, lawmakers, and the heads of the Commerce and Insurance and Economic Development departments.

Waived rules would create an open "sandbox" for businesses to operate in without typical regulatory burdens to see how they might fare.

Businesses eligible for the sandbox program would be those that use new or emerging technology or ideas for their products, production or services and have a physical presence in the state.

The bill, sponsored in the House by Rep. Alex Riley, R-Springfield, passed the lower chamber earlier this month, though some lawmakers were concerned about a risk for favoritism and the partisan makeup of a committee largely composed of appointees tapped by Republican leadership.

The bill took its first steps in the Senate on Tuesday afternoon with a hearing before the Economic Development Committee.

Riley, who assists businesses in working through these regulations in his role as an attorney, said the bill would create a more accessible alternative for emerging entities and ideas.

"So what this bill is designed to do is create an alternative way where they can do that without having to jump through all the normal regulatory red tape while still having consumer protections in place," Riley said. "It creates a very vigorous application process to make sure that you don't have bad actors, individuals or entities or products or services that could cause harm to the public, that are able to take advantage of this situation. So there are a lot of checks and balances in place to make sure that doesn't happen."

Ray McCarty, CEO and president of Associated Industries of Missouri (AIM), testified in favor of the legislation, noting his group's preferred solution was easing regulations for businesses across the board.

"We support the concept of what the bill is trying to do. And certainly anything we can do to help entrepreneurship we want to do," he said. "The one caveat that we have is that by setting up a regulatory sandbox and allowing these brand new businesses to compete with existing businesses, and not have to follow the same regulations, that could cause a conflict down the road, so we'd ask you to look at that as the Senate considers this.

"Maybe the better alternative is to try to reduce regulations overall for everyone, rather than just a select group," he said.

Jeremy Cady, Missouri state director of Americans for Prosperity, James Harris, a representative of Cisco Action, and Kara Corches, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry, also backed the proposal with brief testimony.

Michael Berg, political director for the Missouri chapter of the Sierra Club, said the environmental group opposed the bill as it currently stands and called for further accountability measures to be added if it continues to make progress through the Senate.

"We're worried about the whole concept that if you grant some businesses the ability to not obey a law or rule that it can undermine the concept of the impartial rule of law," Berg said. "I think we all want protection for public health, consumers and the environment without unnecessarily stifling innovative businesses.

"There's a good suggestion on the floor of the House of having this regulatory relief office instead putting the funds to help businesses navigate the process better," he added. "And I think looking at unnecessary rules, of course, is a good idea. But we are worried about the potential to undermine environmental regulations and also the potential to green light and push potentially environmentally negative businesses."

Berg said other changes the group would like to see included further transparency measures, application questions regarding the possible environmental impact of granting sandbox status, a longer review period for applications and a more specific definition of what qualifies as "innovative."

Sandboxes are becoming more common across the country. Thus far, nearly a dozen states have established sandboxes, mostly for specific industries such as insurance and financial technology.

Kentucky, the only neighboring state to have a program on the books, extends the opportunity to insurance companies alone.

If the bill were to pass with the current proposal intact, Missouri would become the second state to create an all-encompassing sandbox program after Utah, which enacted its own last year.

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